Washington — XM Satellite Radio said it is seeking credit to maintain a $120 million escrow account required by its contract with Major League Baseball (MLB) and that failure to obtain the credit could impact its financial position.
To satisfy its agreement with MLB, XM had a surety bond for $120 million, which expired June 30, 2008. The company is now seeking to obtain another surety bond, letter of credit or similar arrangement for a sum of $62.5 million. The remaining$57.5 million has been secured from XM’s cash reserves and at present XM has put up $62.5 million from a revolving credit facility.
XM also said in a filing with the Security Exchange Commission last week that it is in discussions with MLB about the escrow account and related matters and “there may be further developments.”